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- 3 part question, please answer completely: Jaime has preferences over GOOD (A) and GOOD (B), with $60 to spend on the two goods. The market price of GOOD A is currently $3. However, if she purchases a membership to Costco for $10, she can purchase GOOD B for $2. However, Costco does not sell GOOD B and can only be bought at a price of $1. 1. Write down the mathematical expression describing Jaime budget constraint for two separate cases. In the first, she does not buy the Costco membership, but in the second she does. Very carefully, graph both budget constraints on the same diagram with GOOD B on the horizontal axis and GOOD A on the vertical axis, again labeling all slopes and intercepts. A clear illustration will help you with the following subquestions. Assume for now that Jaime's preferences satisfy the standard consumer theory assumptions: they are monotonic, she has a diminishing marginal rate of substitution, etc so can you say for certain if Jaime will choose to buy the…Assume you have a two-good model: Beverages are on the X axis and Food on the Y axis. You have a $400 budget. The price of beverage is $10, and the price of food is $20. a. Graphically illustrate the budget line correctly. b. Now assume the price of food decreases to $10 ceteris paribus. Graphically note the change on the same graph. PLEASE SOLVE THIS QUESTION WITH PROPER AND UNDERSTANDABLE GRAPHWhat role does utility play in the economic model of consumer behavior? When modeling consumer behavior, utility A. identifies the consumer who receives the most satisfaction from consuming a particular set of goods and services. B. provides an objective measure of satisfaction from consuming a particular set of goods and services in units called "utils." C. identifies the combination of goods and services that is least expensive. D. identifies the combination of goods and services that can be produced most efficiently. E. reflects the enjoyment a consumer receives from consuming a particular set of goods and services. O O
- Explain the First Theorem of Welfare Economic and theSecond Theorem of Welfare Economic.Please relatethese two theorems.Which concept refers to the tendency of individuals to overvalue the utility of an item they already possess compared to an identical item they do not possess? A. Diminishing marginal utility B. Marginal cost C. Sunk cost fallacy D. Endowment effectWhat is the difference between a Social Welfare Function and Social Choice Rule? Explain whether requiring a Social Choice Rule rather than a Social Welfare Func- tion successfully resolves the paradoxical results in social choice theory.
- Chapter 3 Part 2 Questions: Please use the following graph to answer questions 1-3. Units of Environmental Quality 5 4 3 1 4 6 B D E 8 10 12 Units of Power 1. What is the Marginal Rate of Substitution (MRS) from point A to point B. 2. What is the Marginal Rate of Substitution (MRS) from point A to point E. 3. Which combination(s) of goods give the consumer the highest level of happiness? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure.The Law of Diminishing Marginal Utility is just a theory that has no application to everyday life. None of us behaves as if we were subject to this law. True or False? Explain.Assuming the two good case. When a person is attempting to maximize utility and income increases, then: a. The budget constraint expands, shifting the budget line outward indicating more choices are now affordable and a higher utility level is now possible. b. The budget constraint contracts, shifting the budget line outward indicating more choices are now affordable and a higher utility level is now possible. c. The budget constraint expands, shifting the budget line inward indicating more choices are now affordable and a lower utility level is now possible. d. The budget constraint contracts, shifting the budget line outward indicating more choices are now affordable and a lower utility level is now possible.